Aban Offshore is one of the companies that continue to puzzle me as to how they even exist. For companies in drilling sector, raising capital can be very difficult as banks are quite wary of extreme revenue cyclicality and high working capital of the sector.
Aban has failed to generate decent revenue even during high oil price environment and their continually worsening operating performance in the last few years raises question about their ability to run business.
Currently they have a debt of 15000 crores (not sure how they managed to raise so much money with poor financials and D rating) on a topline of 500 crores and an interest payout of 1000 crores. So essentially they are raising debt to pay off debt.
Unless someone bails them out, I will be surprised if this company will be around in next few years.
As for buying the stock, I’d not touch the company even with a 1000-foot barge pole.
If one is interested in drilling sector, Jindal Drilling is a better choice (not a recommendation) among listed Indian companies.
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